Knowledge Realty Trust Q1 FY27 Earnings Analysis

Future growth expectations for Knowledge Realty Trust (KRT) in sales/revenue/volumes are as follows: - FY26 revenue grew 16% YoY to ~INR 4,577 crores with NOI growing 18% YoY to ~INR 4,048 crores, reflecting strong operating performance. - Occupancy in Mumbai (core growth engine) is near 90%, expected to reach 92-93% soon, driving rental growth. - Under-construction assets totaling 9.2 million sq.ft. (1.2 million sq.ft. to be onboarded by Q2 FY27-28) will add volume and revenue. - Approximately 44% of 1.5 million sq.ft. expiring leases for FY27 are already re-leased, primarily in Mumbai, offering strong mark-to-market rental upside. - 87% of incremental leases in FY26 include annual escalations, expected to continue around 4.5-5% escalation. - Organic growth drivers include occupancy ramp-up, leasing mark-to-market opportunities, and ongoing developments. - Inorganic growth is pursued cautiously, focusing on strategic acquisitions fitting portfolio and cost criteria. Overall, KRT expects higher NOI, occupancy, and DPU growth supported by leasing activity and asset addition.

- Revenue for FY26 grew 16% YoY; NOI grew 18% YoY, indicating strong earnings growth momentum. - FY26 distributions exceeded IPO projections, reflecting disciplined cost management and strong operating performance. - Portfolio occupancy improving (92% current, targeting 94-95% in FY27), which will drive higher NOI. - Strong mark-to-market (MTM) potential of approximately 25% over lease expiries, especially in Mumbai, supporting rental growth. - 87% of incremental FY26 leases have annual escalations around 4.5-5%, underpinning steady rental escalations. - New construction (1.2 million sq ft onboarding Q2 FY27 plus 1.4 million sq ft starting construction) to add incremental rentable area and NOI. - Continued selective acquisitions and developments to drive organic and inorganic growth. - Tax rates expected at 10-12% of EBITDA, aiding profitability and distributable cash flows. - Stable and predictable earnings supported by high-quality, AI-resilient tenant base focused on tech and front-office sectors.

- Knowledge Realty Trust has a sizeable mark-to-market potential of 25% supported by a well-phased lease expiry profile. - Construction of a new 1.4 million square foot block at Sattva Global City in Bangalore has commenced, in addition to an existing under-construction portfolio of 1.2 million square feet. - The 1.4 million square foot development at Sattva Global City is backed by a combination of phased demand and speculative opportunity, with focuses on repositioning through capex works and SEZ demarcation. - Discussions are ongoing with educational institutions and potential BTS (build-to-suit) opportunities at Sattva Global City. - The under-construction 1.2 million square foot assets are expected to be onboarded by Q2 of FY26-27. - About 1.4 million square feet of new phased development and BTS opportunity in Sattva Global City will commence construction within the fiscal year. - The investment strategy includes evaluating value-accretive third-party acquisitions and pursuing growth opportunities prudently with a focus on strategic portfolio fit.

- Knowledge Realty Trust is actively monitoring the interest rate environment and will calibrate financing activities opportunistically. - The company aims to raise more fixed coupon debt at the right time to ensure stability amid potential interest rate increases. - They have a strong balance sheet, low leverage, and healthy cash flows, positioning them well for future growth and stable distributions. - No specific mention of imminent equity fundraising. - For inorganic growth, they are casting a wide net but will only pursue acquisitions that offer strategic fit and reasonable prices. - No explicit current plans for debt or equity fundraising announced in this call.

- Knowledge Realty Trust has an active pre-leasing pipeline of about 1.2 million square feet across two upcoming assets. - For the Endeavour asset, approximately 250,000 square feet of pre-leasing is in active discussion. - The trust aims to secure larger anchor tenants and avoid breaking leasing into smaller portions to attract big clients. - There is roughly a 1.5 million square feet organized RFP involving a pharmaceutical company and a banking company available in Mumbai. - Mumbai is a core growth market with about 3.2 million square feet of leases expiring over FY26-27 and FY27-28 (about 1.5 million sq ft annually). - About 44% of the 1.5 million square feet expiring annually is already tied up for FY27. - Mumbai accounts for roughly 75% of the mark-to-market leasing potential due to shorter leases and low historic rents. - The trust also has a 1 million square feet pipeline to add to its portfolio.